Can I Replace My Five-Year-Old Long Term Care Policy?

Can I Replace My Five-Year-Old Long Term Care Policy?

A question today from one of our readers, Michael in Texas, who is getting a 12% rate increase on his five-year-old Long Term Care Insurance Policy:

“Dear LTC Tree, thanks for the great site. I found a lot of useful information on your site but one thing I wanted to ask… but am afraid to fill out a full quote form because I don’t want a million agents bothering me! (sorry but you know it’s true)

I purchase a policy with my wife about five years ago, when we were 65 and 63 with $#@@#$ Life Insurance Company. (editor’s note: company hidden but can easily be figured out with a google search). At the time, we purchased the 5% compound rider and $175/day, which has grown to $206/day now.

This company has asked for a 12% rate increase on my policy and an 14% increase on hers. We don’t know what to do!

-Michael

Alpine, TX”

 

LTC Tree’s response:

“Howdy Michael, thanks for the note. You are in a quandary because you’re both five years older than you were when you originally purchase your policy, so every competitive policy on the market will be based on that higher age, meaning more premium. Here’s the good news. You have an awesome level of coverage, today most folks are buying 3% compound while you have 5% compound. Doing the math, your current policy will double in benefits in about fifteen years while something purchased today, while great, takes about 24 years to double your benefit amount!

Okay, that said, we ran a comparison and your current policy is $1866/year, while a new policy would be about $4,155/year. We’d love to have your business but don’t think this makes a lick of sense. Keep that 5-year-old policy, stay healthy, and tell all your friends who don’t have this yet about how good of a deal YOU have and how straight-shooting WE are. Stop by our office if you’re ever in Atlanta and say hello!

-LTC Tree Analytics Department “

Executive Summary:

If you have a policy that is more than just a few years old, it virtually NEVER makes sense to replace it. If you have a policy, do not request quotes on new coverage. Just call us, it’s a huge time saver for us AND for you. Our number is staffed all the time, it’s 800-800-6139.

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